Liquor Control Board
Background Pennsylvania and Utah are the only two states that allow no privitization. Often are called State Stores. The Pennsylvania Liquor Control Board, which manages the state's 640 liquor stores, generated $373.6 million in taxes and profits on $1.5 billion in sales during fiscal 2004-05. Pennsylvania's revenue stream comes from the state's 6 percent sales and 18 percent liquor tax, plus from a 30 percent markup charged over wholesale prices. :States that aren't in the wine and spirits business don't have to worry about losing that mark-up to direct wine sales. Pennsylvania's politicians are trying to figure out how to balance the rights of Pennsylvania wine drinkers with state's financial needs. * PA's Liquor Stores, operated by the Liquor Control Board, could be sold. * Rendell not opposed to direct wine shipments. :Rendell "acted" as if he would support privitization when he was running for Guv....but now it's obvious that this too, was just bluster. :Gov. Rendell said in April 2006 that he would support direct shipments of wine to Pennsylvanians if it can be done with minimal loss of state revenue. :This contradicted comments last week by his spokeswoman, Kate Philips, who said the administration's preliminary position was that all shipments should go through state stores. News January 2007 * Jonathan Newman, chairman of the Pennsylvania Liquor Control Board resigned. Under Newman's leadership, the PLCB has launched gift cards, Sunday sales, outlet stores and one-stop shops in grocery stores. In a letter of resignation e-mailed to The Patriot-News, Newman expressed concern that the Rendell administration appointed a former legislator as CEO of the agency without public debate. "I am hopeful that the Pennsylvania legislature will review this entire process and determine if it is appropriate for the Commonwealth and the future direction of government," he wrote. His resignation is effective Jan. 12. he said he would be available after that date to help with a smooth transition. In June, Newman won a unanimous nod from the Senate Law and Justice Committee to be reappointed to another four-year term. He has served on the board for more than six years, the last four as chairman. This fiscal year, Newman said he expected that the agency would surpass the projected gross sales of nearly $1.6 billion and return more than $490 million to the state's treasury. He said the agency is increasing alcohol education programs and projects. Other plans include launching a virtual state store and opening more one-stop shops. Statements * Liquor Control Board-statement UFCW -- LTE: The 18 percent tax on wine and spirits is invaluable to our state's coffers Details * LCB-CEO from December 2006. Rendell dismissed concerns cited by Philips last week that direct shipping would make it easier for minors to obtain alchohol. "I don't believe it will produce more underage drinking," he said. "Very frankly, it's a revenue issue," Rendell said. :Anything that threatens that potent source of revenue makes many politicians in Harrisburg quake. It's not clear what the financial impact would be if all small wineries in the United States - those producing 100,000 gallons or less per year and unlikely to have national distribution - could ship directly to Pennsylvanians. Advocates for direct shipping argue that direct shipping is unlikely to account for much volume - likely less than what's lost from people driving into Delaware or New Jersey to stock their wine cellars. :"We're talking about a minisicule quantity of product," said Bill Nelson, president of WineAmerica, an association of 840 wineries in 48 states. He said that in places where such sales are permitted, they represent at most 0.5 percent of total wine sales. "It's for wine that is special. It's for wine that you can't otherwise get." Insights "That's what makes us so differerent from New York," said Francis X. O'Brien, a former general counsel for the Liquor Control Board and now a lawyer whose clients include the Pennsylvania Wine Association. "In New York, you can deal the direct shipping without having a revenue impact on the bottom line for the state legislature." Opponents of direct shipping say they worry that direct shippers won't do as good a job collecting taxes as the state stores do now. Such tax losses, called "slippage," is among the issues Rendell said his office is studying as it tries to measure the impact of direct sales. Ed Cloonan, executive director Independent State Store Union, represents 720 state store managers and supervisors, said he is in favor of all shipments going through state stores because it is the only way to ensure that that 18 percent liquor tax is collected. Contact staff writer Harold Brubaker at 215-854-4651 or hbrubaker@phillynews.com.